Incognito is a new privacy and interoperability project that tries to anonymize the tokens of other blockchain. As part of this goal, private versions of Ethereum’s leading decentralized financial platforms (ETH) will be introduced.
Announced on April 24th The pKyber initiative is the first part of Incognito’s initiative to make DeFi private. PKyber was first theorized in October and started large-scale tests on April 24. The team plans to release this on May 7th in the Incognito core network.
How does it work
Incognito is an independent blockchain that focuses on private transactions. The data protection technology is based on the same technologies as Monero (XMR), including ring signatures, hidden addresses and confidential transactions.
Unlike Monero, Incognito focuses on interoperability with other blockchains and supports private tokens. As Andrey Bugaevski, Incognito ecosystem manager, told Cointelegraph, the goal of the project is to create a universal sidechain for public blockchains to take advantage of data protection features.
Bugaevski emphasized that while Incognito does not support full smart contracts, it does allow token creation and a limited number of script statements.. This is enough to build trustworthy bridges to other intelligent contract platforms.
The pKyber platform uses Incognitos Smart Contract Shield to interact with the decentralized Kyber switching center in the main network. Users make transactions with pEthereum, a private token, to initiate a transaction with pKyber. The incognito “broker” contract on Ethereum reads this data and initiates an Ethereum transaction on Kyber using your common public ETH group.
Essentially Incognito acts as a trusted proxy for private trading instructions and enables a person to exchange the ETH for the stablecoin DAI without directly interacting with the Ethereum blockchain.
Incognito’s roadmap also includes integrations with 0x, Uniswap and the compound credit platform, all of which will be completed before July 2020.
A young but surprisingly complete project
While DeFi integration is the latest Incognito update, the project has reached many milestones since the start of its mainnet on October 31, 2019. The project today offers a functional way to protect Ethereum, Bitcoin (BTC), USDT and DAI, BAT, ZIL and various other tokens.
It is worth noting that this system, like any blockchain with optional data protection, should be used with caution when simply “shuffling” funds.
Most functions can be accessed through an incognito wallet that focuses on mobile devices, available for iOS and Android. The wallet contains special functions such as decentralized incognito exchange, stakeout services and token protection.
There is a proprietary token called PRV, the main purpose of which is to be used for transaction fees. Fees can also be paid with the token used for the transaction. This was done to maintain usability, Bugaevski said:
“We are not trying to build a new data protection coin. Nobody needs a new Monero or a new Zcash”
Unique innovations without privacy
The PRV is used as a block reward for validators because Incognito uses the PoS (Proof of Participation) model. In contrast to many other PoS blockchains, no first coin or air drop offer is implemented as a token distribution mechanism. While there is an initial “lead” of 5 million PRVs reserved for development and equipment, another 95 million are expected to be created as block rewards.
This poses a distribution problem because a pure PoS model would simply make the team own almost 100% of the offer.
To fix this Incognito used an innovative solution where Staker can borrow 1,750 PRV (approximately USD 700) as their share and receive part of the rewards of this loan. At the moment, staking can only be performed on dedicated node devices that simulate the acquisition of a mining rig.
Therefore, the system is “manipulated” to act as a proof of work system for the initial distribution. and Bugaevski explains:
“The problem here is that every node in the network has the same performance. So there is no way for you to place more tokens and you have more tickets [de staking]””
The project also proposed an innovative solution to the problem of the bridge without trust in Bitcoin: decentralized custodians. Unlike the custody bridge systems currently used for the token bitcoin, the incognito bridge would use a system based on economic incentives and guarantee reduction, similar to MakerDAO, to fully decentralize custody.
This small project appears to have solved some of the most complex cryptocurrency problems without really affecting decentralization.